2 UK growth stocks on my buy list right now
Right now, there are dividend shares with 7% yields that I think look reasonably durable. And while thatâs very attractive, Iâm focusing my attention on growth stocks at the moment.
That might seem like a strange decision, but I think it makes a lot of sense from a long-term perspective. And there are a couple of UK names I currently hold that are also at the top of my buy list for when I next have cash.
Dividends
The two stocks in question are Celebrus (LSE:CLBS) and Judges Scientific (LSE:JDG). At the moment, neither is in a position to match the returns of a 7% dividend.
Itâs worth noting though, that unlike a lot of dividend shares, both companies retain significant amounts of the cash they generate and invest it for growth. And this is worth factoring in.
On a forward basis, Celebrus is expected to generate around 5.7% of its market value in free cash and Judges Scientific is set to bring in a 3.6% return. This makes the gap significantly closer.
I donât think either stock is a good choice for investors who are looking for big cash returns in the near future. But from a long-term perspective, they look much more attractive.
Celebrus
Celebrus is a rare example of a genuine UK tech stock. Itâs a software business with a product that allows companies to monitor customer activity on their apps and websites.
The firmâs core product is protected by strong intellectual property. But it operates in an industry where there are much bigger competitors â and this is the major risk.
Its free cash outflow in 2025 is the result of a one-off change in working capital as the business transitions to a recurring revenue model. So I donât expect this to be repeated in the future.
Analysts are expecting free cash flows to reach 8% of the firmâs current market value by 2028. And if the growth continues, I think Celebrus shares could be a terrific long-term investment.
Judges Scientific
Judges Scientific is a decentralised collection of companies focused on scientific instruments. And a key part of the firmâs growth strategy involves adding more businesses to its network.
Thereâs always a risk of overpaying for an acquisition and a decentralised approach emphasises this. It means earning a return on investment by integrating businesses to cut costs is harder.
But the company has a lot of advantages on its side. In terms of acquisitions, its size means it typically finds opportunities that are too small to interest larger private equity firms.
That means competition is limited, which is helpful when it comes to negotiating deals. And I think this means Judges Scientific has a chance to keep growing for a very long time to come.
Long-term investing
Neither Celebrus nor Judges Scientific looks attractive based on last yearâs earnings and free cash flows. But I expect both to grow their earnings and free cash flows strongly for a long time.
It takes a lot to make me turn away from a 7% dividend yield from a resilient-looking business. Over the long term, however, I think Iâm likely to get better returns from companies that can grow.
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Stephen Wright has positions in Celebrus Technologies Plc and Judges Scientific Plc. The Motley Fool UK has recommended Judges Scientific Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
